Mistakes to Avoid in Estate Planning
Failing to plan, failing to update the estate plan, failing to coordinate beneficiaries, forgetting to plan for disability and long-term care are the most common mistakes to avoid in estate planning. Failing to involve a legal, tax, or financial professional is another common estate planning mistake. Estate planning mistakes can subvert the decedent’s real intent and significantly reduce the inheritance the decedent leaves behind. They can expose surviving family members and beneficiaries to additional stress in a period of grief.
An estate planning lawyer familiar with state-specific estate-planning laws can help a person make wise decisions and avoid common estate planning mistakes. The lawyer can also help the person take all aspects of the financial legacy into account and prepare the required legal documents.
Most Common Estate Planning Mistakes
Failing to Plan
Estate planning can be uncomfortable for most people. It calls for people to acknowledge their unavoidable death and actively plan for it. That might be the reason so many people fail to plan their estate. A 2017 Caring.com study shows that 60% of American adults above 45 years do not have a will.
Some adults fail to plan because they are confident the legal system will split up their assets fairly among surviving family members. Others assume estate planning is expensive. Others think their estate is not big enough to leave anyone.
Failing to Update the Estate Plan
Estate planning is not a one-off event. Estate plans require a regular update to reflect major live events, the estate owner’s goals shift, and changes in public policy. Relocating can create legal issues, as state law governs legal documents like wills, powers of attorneys, and trusts.
Failing to Coordinate Beneficiaries
Some people make the costly blunder of modifying their Will, but forgetting to amend beneficiaries for the most valuable assets in their estate. These assets include life insurance policies, retirement accounts, and annuities. The legally-binding beneficiary documents associated with such accounts override whatever the Will says.
An estate planning attorney can guide clients through the process of drafting Wills that avoid common mistakes in Wills. Doing this ensures the clients’ wishes are honored and their families protected.
Forgetting to Plan for Disability and Long-term Care
A person hitting 65 years today has a 70% chance of requiring some form of long-term care support for the rest of his or her life. Elderly persons living in nursing homes spend more than $100,000 per year. Those who hire in-home caregivers spend more than $50,000 per year. These figures indicate that long-term care is probably the biggest unfunded retirement risk that a retiree might face today.
Not Involving a Legal, Tax, or Financial Professional
Failing to consult a legal, tax, or financial professional during estate planning is another common mistake. The outcome is often a poor estate plan that does not address the intent and demands of the estate owner.
How You Can Avoid the Most Common Estate Planning Mistakes
The best time to start an estate plan for a person who has not already done so is now. The person should take the time to meet a financial planner or estate planning attorney to set up an accurate and error-free estate plan.
Regularly Updating the Estate Plan
Estate planning instruments, including Wills, Trusts, and Powers of Attorney, are living documents that require regular reviews and updates. The estate owner should review and update the estate plan anytime a significant life event happens. These events include births, divorces, deaths, moving states, new laws, and new asset acquisitions.
Reviewing Beneficiary Forms Regularly
The estate owner should review beneficiary forms at least once in three years to verify the named beneficiaries. In the event of a divorce, the estate owner should update the beneficiary form to reflect what is in the Will.
Planning for Disability and Long-Term Care
While still working, a person should ensure he or she has an adequate amount of short-term insurance coverage and long-term insurance coverage. As the person approaches retirement, the person should shift attention to long-term care planning. The person should discuss the available options for funding long-term care with an estate planning attorney.
Working Closely with BARRY LAW, INC.
If you are starting an estate plan, you might be wondering how an estate planning attorney can help protect your family’s future. Barry Law, Inc. can tailor a client’s estate planning documents to satisfy the client’s unique needs. We will first review the client’s assets and wishes, and then develop an estate plan that safeguards the future of the client’s family. Call Barry Law, Inc. to set up your no-cost, no-obligation appointment to discuss your estate planning wishes.